The Social Security Administration announced the 2025 cost-of-living adjustment (COLA) rate would increase by 2.5%, meaning inflation is cooling across the nation. This follows years of historically high inflation statistics, and thus, higher COLA rate increases.
COLA affects more than 71 million Americans, including Veterans receiving VA disability.
Higher Inflation, Lower COLA
We’ve seen COLA rates ticking back down since the highs of 2022 and 2023, when we saw 5.9% and 8.7% respectively. This year, while still higher than normal, we saw COLA rates cool off, dropping to 3.2% before landing at 2.5% for 2025. While you may think 2.5% a big rate change, COLA rates since the 2009 great recession have often been considerably lower.
The implications of these adjustments are significant as they affect the financial well-being of a substantial portion of the Veteran population.
When 2025 COLA Rates Go into Effect
The 2.5% increase goes into effect for VA disability pay on Dec. 2, 2024. The first checks with the new rates go out on Dec. 31, 2024.
Social Security benefits go into effect Dec. 31, with checks beginning in January. Supplement Social Security Income and Social Security Disability Insurance (SSDI) payments go into effect in Jan. 2025.
How COLA is Determined
The Bureau of Labor Statistics’ Consumer Price Index (CPI-W) determines the annual Cost-of-Living-Adjustment (aka Cost-of-Living Allowance). It is based on the percentage increase of the CPI-W from the previous year’s third quarter versus the current year’s third quarter (July, August, and September).
Veterans who retire during the current calendar year will receive a temporary partial COLA due to already receiving a military pay raise in January (View the 2024 Military Pay Charts here).
- The COLA increase is only set at the CPI-W if the increase is less than 2%.
- If inflation is between 2 to 3% then COLA is set at 2%.
- If the CPI-W is greater than 3% then COLA is set at 1% below the CPI-W.
The CPI-W takes into account eight major spending categories:
- Food and beverages
- Housing
- Apparel
- Transportation
- Medical care
- Recreation
- Education and communication
- Other goods and services
Who Relies on COLA (Cost-of-Living Adjustment)?
- Retired Military Veterans
- Disabled Veterans – See VA Disability Rate Tables
- Veterans’ Pension Benefits – Veterans Pension Rate Tables
- Survivor Benefit Annuitants – Survivors’ Pension Rate Tables
- Surviving Families of Veterans – Parents’ Dependency and Indemnity Compensation (DIC) Tables and Dependency and Indemnity Compensation (DIC)
- Social Security recipients
- Federal Civilian Retirees
- Supplemental Security Income (SSI)
- Social Security Disability Insurance (SSDI)
- Eligibility for Medicare Extra Help and Medicaid
- Federal and state food and housing assistance programs
Does COLA Impact Federal Pay Increases?
Pay increases for current federal workers and COLA for retired workers often differ because they are based on changes in different economic variables.
Changes in private-sector wages and salaries determine federal pay increases. The government indexes federal civil service workers pay to private-sector salaries to ensure government pay remains competitive with the private sector.
Cost-of-living adjustments (COLA) ensure that a retiree’s income maintains buying power for the same amount of goods and services annually.
Why We Track COLA at Veteran.com
COLA plays a role in many military benefits – namely, VA disability rates. We believe every Veteran should have access to and understand what these figures mean and how they apply to their benefits.
| Year | COLA |
|---|---|
| 2025 | 2.5% |
| 2024 | 3.20% |
| 2023 | 8.70% |
| 2022 | 5.90% |
| 2021 | 1.30% |
| 2020 | 1.60% |
| 2019 | 2.80% |
| 2018 | 2.00% |
| 2017 | 0.30% |
| 2016 | 0.00% |
| 2015 | 1.70% |
| 2014 | 1.50% |
| 2013 | 1.70% |
| 2012 | 3.60% |
| 2011 | 0.00% |
| 2010 | 0.00% |
| 2009 | 5.80% |
| 2008 | 2.30% |
| 2007 | 3.30% |
| 2006 | 4.10% |
| 2005 | 2.70% |
| 2004 | 2.10% |
| 2003 | 1.40% |
| 2002 | 2.60% |
| 2001 | 3.50% |
| 2000 | 2.50% |
| 1999 | 1.30% |
| 1998 | 2.10% |
| 1997 | 2.90% |
| 1996 | 2.60% |
| 1995 | 2.80% |
| 1994 | 2.60% |
| 1993 | 3.00% |
| 1992 | 3.70% |
| 1991 | 5.40% |
| 1990 | 4.70% |
| 1989 | 4.00% |
| 1988 | 4.20% |
| 1987 | 1.30% |
| 1986 | 3.10% |
| 1985 | 3.50% |
| 1984 | 3.50% |
| 1983 | N/A |
| 1982 | 7.40% |
| 1981 | 11.20% |
| 1980 | 14.30% |
| 1979 | 9.90% |
| 1978 | 6.50% |
| 1977 | 5.90% |
| 1976 | 6.40% |
| 1975 | 8.00% |
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Jon Rehagan covers financial topics and military news, aimed at helping those who've served our country and everyday civilians
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Joe Crane, a Marine Corps veteran and airline pilot, hosts the "Veteran on the Move" podcast, inspiring veterans to pursue entrepreneurship. He served 24 years as a Super Cobra pilot and leader.